New Product Development

&
Product Life cycle strategies
 New product Development
A firm can obtain products in two ways :-

 Acquisition – By buying a whole company, a

patent, or a licence to produce some else’s product

 New product development– the development

of original products, product improvements, product
modifications, and new brands through the firm’s own
R&D efforts.
Steps in New product development

 Eight major steps in this process

1. Idea generation : the systematic search
for new product ideas.
-Internal idea sources
-External Idea sources

2. Idea screening : Screening new product

ideas in order to spot good ideas and drop poor
ones as soon as possible.
 Eight major steps………….
3. Concept development and testing
Product Concept – A detailed version of the new
product idea stated in meaningful consumer terms
Concept Testing – testing new product concept
with a group of target consumers to find out if the
concepts have strong consumer appeal
4. Marketing strategy Development
Marketing strategy consists of three parts:
Target Market
Product positioning
Sales, market share, profit goals for first few years
 Eight major steps………….

5. Business Analysis
A review of the sales, costs, and profit projections
for a new product to find out whether these factors
satisfy the company’s objectives.

6. Product Development
Developing the product concept into a physical product
in order to ensure that the product idea can be turned
into a workable product.
Eight major steps………….

7. Test Marketing
The stage of new product development in which
the product and marketing program are tested in
more realistic market settings
Standard test Markets
Controlled test markets
Simulated test markets
8. Commercialization
Introducing a new product into the market
Steps in New product development
Product life-cycle strategies
The course of a product’s sales and
profits over its life time. It involves
five distinct stages:
 Product development,
 introduction,
 growth,
 maturity, and
 decline.
Sales and profits over the product’s
life from inception to demise
 Introduction
 The product life cycle stage in which
the new product is first distributed and
made available for purchase
- Low sales
- High cost per customer
- Negative profits
- Few competetiors
 Introduction
 Marketing objective :- Create product
awareness and trial
 Strategies :-
- Product – Offer a basic product
Price - Cost Plus
Distribution – Selective distribution
promotion – Product awareness
amoung early adopters and dealers
- Heavy sales promotion to
entice trial
 Growth Stage
 The product life cycle stage in which a
product’s sales start climbing quickly
- Rapidly rising Sales
- Average cost per customer
- Rising profits
- Customers are early adopters
- Competitiors are growing in number
 Growth Stage
 Marketing objective: Maximize market share
 Strategies
- Product – Offer product extensions
- Offer Warranty, Service
- Price - price to penetrate market
- Distribution – Build intensive distribution
- Promotion
Advertising – Build awareness and interest
in mass market
Sales Promotion- reduce to take
advantage of heavy customer demand
 Maturity Stage
 The stage in the product life cycle in
which sales growth slows or levels off.
- Peak sales
- Low cost per customer
- High profits
- customers are of Middle majority
- Competitiors are of stable number
and beginning to decline
 Maturity Stage
 Marketing objective : Maximize profit while defending
market share
 Strategies:
- Product – Diversify brand and models
- Price – price to match or beat
competitiors
Distribution – Build more intensive
distribution
Promotion – Advertising -Stress brand
differences and benefits
Sales promotion – increase to
encourage brand switching.
 Declining Stage
 The product life cycle stage in which a
product’s sales decline
- Declining sales
- Low cost per customer
- Declining profits
- Customers are laggards
- Competitiors are declining in number.
 Declining Stage
 Marketing Objectives : reduce expenditure
and milk the brand
 Strategies :
Product – Phase out weak items
Price - Cut price
Distribution – Go selective: phase out
unprofitable outlets
Promotion-
Advertising- Reduce to level needed to
retain hard core loyals
Sales Promotion – reduce to minimal level.
PLC concept also can be applied:-

 Styles

 Fashions

 Fads
 Styles
A basic distinctive mode of expression.

 Style appears in home, clothing, and art

 Once a style is invented, it may last for
generations
 A style has a cycle showing several
periods of renewed intrest
 Fashion
 A currently accepted or popular style in
a given field.
Eg: Formal “ business attire” look of
corporate dress in 1980s and early 1990s give
way to the “business casual” look of today
 Fashion tends to grow slowly, remain
popular for a while, and then decline
slowly
 Fad
 Fads are temporay periods of unusually
high sales driven by consumer enthusiasm
and immediate product or brand popularity
Thank you